Reference no: EM132480583

Nash Corporation owns machinery that cost $26,000 when purchased on July 1, 2014. Depreciation has been recorded at a rate of $3,120 per year, resulting in a balance in accumulated depreciation of $10,920 at December 31, 2017. The machinery is sold on September 1, 2018, for $13,650.

Question 1: Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Cheyenne Co. purchased land as a factory site for $424,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months.

Point 1: The company paid $44,520 to raze the old buildings and sold salvaged lumber and brick for $6,678. Legal fees of $1,961 were paid for title investigation and drawing the purchase contract. Cheyenne paid $2,332 to an engineering firm for a land survey, and $72,080 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,590, and a liability insurance premium paid during construction was $954. The contractor's charge for construction was $2,904,400. The company paid the contractor in two installments: $1,272,000 at the end of 3 months and $1,632,400 upon completion. Interest costs of $180,200 were incurred to finance the construction.

Question 2: Determine the cost of the land and the cost of the building as they should be recorded on the books of Cheyenne Co. Assume that the land survey was for the building.